Global Economic and Political Events Shaping Markets - Part 2

8.

Tesla surged 6% as Elon Musk followed Uber's former founder on X platform, sparking speculation about Robotaxi, and due to June deliveries from Chinese electric vehicle startups exceeding expectations, leading to speculation that Tesla's China deliveries would also beat expectations.

Analysis:

Impact on FX:Positive developments in the tech sector could strengthen the USD.

FX Pair: EUR/USD, USD/JPY, GBP/USD

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Positive impact on Tesla and related tech stocks.

Companies:

Tesla (TSLA), Uber (UBER)

9.

The People's Bank of China announced, “After careful observation and assessment, it has decided to borrow government bonds from primary dealers in the near future.” As soon as the signal to short government bonds was released, the recently hot 30-year government bonds fell 1.2%, and the market no longer fantasizes about Chinese-style quantitative easing. (The central bank has a clear stance on defending the exchange rate)

Analysis:

Impact on FX: Defensive stance on the exchange rate could strengthen the CNY.

FX Pair: USD/CNY, EUR/CNY, GBP/CNY

Impact on Shares:

H Shares and A Shares: Negative impact on long-term bond investors.

Companies:

China Government Bond ETFs

10.

The first round of France's snap legislative election results has narrowed the possible outcomes, with both scenarios indicating that investors will face long-term uncertainty. The National Rally and its allies, led by Marine Le Pen, are currently the only party likely to achieve an absolute majority and thus control the next government. (Uncertainty in French and German politics will continue to suppress the euro exchange rate)

Analysis:

Impact on FX:Political uncertainty in France could weaken the EUR.

FX Pair: EUR/USD, EUR/JPY, EUR/GBP

Impact on Shares:

European Market: Political uncertainty could negatively impact European stocks.

Companies:

BNP Paribas (BNP.PA), Deutsche Bank (DBK.DE)

11.

BlackRock CEO Larry Fink stated that by acquiring data provider Preqin, the company will be able to apply its index fund model to the fast-growing asset class. During an investor and analyst call in New York, Fink said, “We believe we can build indexes for private markets. Just as indexes have become the language of public markets, we envision bringing index principles and even iShares to private markets.” (AI and big data analytics are starting to integrate into the fund market)

Analysis:

Impact on FX:Positive developments in the financial sector could strengthen the USD.

FX Pair: EUR/USD, USD/JPY, GBP/USD

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Positive impact on BlackRock and related financial stocks.

Companies:

BlackRock (BLK), Preqin

12.

US Secretary of State Antony Blinken stated at a Brookings Institution event that despite efforts to avoid conflict, the US still sees “momentum” towards war between Israel and Hezbollah. (US predictions of conflicts or terrorist attacks often come true, suggesting further escalation of the Israeli-Palestinian conflict)

Analysis:

Impact on FX: Increased geopolitical risk could strengthen the USD as a safe-haven currency.

FX Pair: EUR/USD, USD/JPY, GBP/USD

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Negative impact on global market sentiment.

Companies:

Defense sector stocks, Lockheed Martin (LMT), Northrop Grumman (NOC)

13.

According to a Bloomberg survey, OPEC's crude oil production remained stable for three consecutive months, with an average daily production of 26.98 million barrels in June, down 80,000 barrels from the previous month. Although production in Iraq and Nigeria decreased, some key member countries continued to exceed the agreed limits. (Classic OPEC non-compliance, combined with increased US and Russian oil production, suggests global oil supply is steadily increasing)

Analysis:

Impact on FX:Increasing oil supply could weaken oil prices, impacting oil-exporting currencies.

FX Pair: USD/CAD, USD/NOK, USD/RUB

Impact on Shares:

US Stock Market (NASDAQ, S&P 500): Negative impact on energy stocks.

Companies:

ExxonMobil (XOM), Chevron (CVX), Schlumberger (SLB)

14.

The second round of Iran's presidential election will be held on July 5, with candidates being reformist Masoud Pezeshkian and conservative Saeed Jalili. The need for a second round of elections arose because no candidate secured a majority in the first round. This election follows the death of President Ebrahim Raisi in a helicopter crash. If Iran elects a president who advocates improving relations with the West and negotiating to lift sanctions, it could positively impact the security of the Persian Gulf and global oil supplies. However, the ultimate impact still depends on the decision of the Supreme Leader.

Analysis:

Impact on FX:Potential for improved relations with the West could strengthen the Iranian rial (IRR) and stabilize oil markets.

FX Pair: USD/IRR, EUR/IRR

Impact on Shares:

Global Oil Market: Potential positive impact on oil supply and prices.

Companies:

Royal Dutch Shell (RDS.A), TotalEnergies (TTE)